Tag Archives: Equity Market

EMERGING MARKETS-Asset Latam recovers from recent losses, Petrobras rebound supports stocks | Instant News


    * Drop in U.S. yields helps risk assets
    * Brazil stocks recover from worst day in 10 months
    * Mexican peso rises for first time in 7 sessions

 (Adds details, updates prices)
    By Susan Mathew
    Feb 23 (Reuters) - Brazil shares rose on Tuesday as oil
major Petrobras bounced back from a bruising sell-off, with most
Latin American assets recovering from a slew of recent losses as
pressure from high U.S. yields eased. 
    The Bovespa stock index rose 2.1% after a near 5%
slide on Monday, as shares in Petroleo Brasileiro
recovered 10% from a 22% plunge that wiped out 71 billion reais
($13 billion) in market value. 
    Petrobras' board is set to meet on Tuesday to rule on
Brazilian President Jair Bolsonaro's appointment of former
Defense Minister Joaquim Silva e Luna to helm the state-run
firm.
    "Bolsonaro's decision to replace Petrobras' CEO is dashing
hopes of Brazil's return to economic orthodoxy," said
strategists at BCA Research. Analysts broadly note that the
president is adopting populist policies instead of fiscal
consolidation ahead of elections 20 months down the line.
    "The central bank is likely to lift the policy rate in
response... which would keep government borrowing costs above
the nominal GDP growth rate," they said. "A violation of the
fiscal spending rule would weigh further on the real amid higher
inflation expectations, and bonds are likely to underperform as
rates rise." 
    The real rose 0.3% after marking its worst
session in a month on Monday, while dollar bonds and the cost to
insure exposure to Brazil's sovereign debt steadied following
dramatic falls on Monday.
    Charts show that Brazil's weighting is declining in the main
JPMorgan EM bonds index.   
    A recent spike in U.S. treasury yields had weighed on
risk-driven assets, particularly emerging market bonds and
currencies, as investors sought safer investment paths. Latin
American assets fell the most among their peers.
    But yields dropped on Tuesday after Federal Reserve Chairman
Jerome Powell said the economy still needed central bank
support.
    "One reason for Latam FX struggles may be that markets
expect that an inflation overshoot in the U.S. would spill over
to other economies, and would be harder to contain in Latam,
where central bank credibility is perceived to be weaker," said
Ilya Gofshteyn, senior EM macro strategist at Standard
Chartered.
    Mexico's peso rose for the first time in seven days
against a stronger dollar. The peso lost 3.7% over the last six
days on concerns about factory activity as fuel supply from
Texas was impacted by a deep freeze.
    Chile's peso, which has outperformed its regional
peers thanks to strength in the copper price, extended gains
into an eight consecutive session. 
    
    Key Latin American stock indexes and currencies:
    
                              Latest     Daily % change
 MSCI Emerging Markets         1393.90             -0.27
                                        
 MSCI LatAm                    2330.32              2.07
                                        
 Brazil Bovespa              114975.20              2.05
                                        
 Mexico IPC                   45274.80              0.73
                                        
 Chile IPSA                    4506.23             -1.38
                                        
 Argentina MerVal             47672.85            -3.239
                                        
 Colombia COLCAP               1351.21             -0.07 Currencies             Latest     Daily % change
 Brazil real                    5.4380              0.30
                                        
 Mexico peso                   20.5595              0.75
                                        
 Chile peso                      705.4              0.14
                                        
 Colombia peso                 3583.72              0.20
 Peru sol                       3.6517              0.00
                                        
 Argentina peso                89.5300             -0.10
 (interbank)                            
                                        
 
    
 (Reporting by Susan Mathew and Sruthi Shankar in Bengaluru,
graphic by Marc Jones in London; Editing by Nick Macfie and
Rosalba O'Brien)
  

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Commodity rally helped Australian stocks close nearly 1% higher | Instant News


* Higher oil prices due to lower production benefit energy stocks

* Copper prices continue to strengthen due to limited supply

* Tech stocks track Wall Street peers lower (Updates to close)

Feb 23 (Reuters) – Australian stocks closed almost 1% stronger on Tuesday, as stronger commodities boosted market expectations of better growth prospects and lifted miners and energy stocks.

The S & P / ASX 200 index rose 0.9% to 6,839.2 at the close of trading.

Participants also watched for a possible change in the view of the US Federal Reserve from Chairman Jerome Powell in his testimony before the Senate Banking Committee at a later date.

Commodity prices rose as oil prices rose on the prospect of tight global supplies after US production was hit by cold weather and a meeting of leading crude producers is expected to hold back most of the production.

Australia’s energy stockpile rose 4.9% due to stronger oil prices.

Oil and gas explorers Woodside Petroleum and Santos Ltd were up 5.7% and 5.9%, respectively.

Gold stocks surged 2.8%, with spot gold hitting a one-week high as inflation concerns boosted gold’s appeal as a hedge.

Miners gained 2% on the back of continued increases in copper prices, helped by limited supply and strong demand expectations.

Copper-exposed global miners, BHP Group and Rio Tinto, rose 3.1% and 1.8%, respectively.

Leading independent gold miner Newcrest Mining jumped 4.4%, while peer Bellevue Gold gained 5.1%. Finance also rose, with the so-called “Big Four” banks rising in the 1.1% to 1.9% range.

Tech shares followed Wall Street peers lower to fall 4.1%, with buy-now-pay-later Afterpay Ltd tumbling 7.2%, while accounting software maker Xero Ltd lost 2.7%.

SEEK Ltd closed 7.1% lower after the job portal operator said it was in talks to cut its stake in China’s Zhaopin unit by A $ 2.2 billion ($ 1.74 billion).

In New Zealand, the benchmark S & P / NZX 50 index was down 0.3%, pulled down by utilities and health care stocks.

($ 1 = 1.2628 Australian dollars)

Reporting by Soumyajit Saha in Bengaluru, Editing by Sherry Jacob-Phillips

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Australian stocks traded flat as a tech slump offset commodity gains | Instant News


* Tech stocks observe their worst day in nearly a month

* Energy stock is set for the best day in nearly six weeks

* Mining stocks hit their highest level since January 8

* NZ is set for the fourth consecutive losing session

February 23 (Reuters) – Australian stocks traded little changed on Tuesday as gains in miners and energy companies in stronger commodity prices battled losses in technology stocks following weak hints from US peers.

The S & P / ASX 200 index was almost unchanged at 6,779.5 by 0000 GMT, after swinging between positive and negative territory for most of the early part of the session.

Tech stocks were the biggest drag on the benchmarks, following losses to US peers who were under pressure from rising bond yields and concerns over higher inflation impacting the valuation.

“The continued increase in real income should reflect better growth prospects for equities but if it rises suddenly, driven higher by flows of rapid repositioning, then we think the impact of a higher discount rate will attract equities lower,” said analysts at UBS are in a note.

Buy-now-pay-later giant Afterpay slumped 7.8% causing losses among local tech firms set for their worst session since Jan.28.

Investors will be watching for any changes to the US Federal Reserve’s dovish outlook from Chairman Jerome Powell when he speaks before the Senate Banking Committee at a later date.

Energy stocks rose by up to 4.1% and were on track to post their best session since January 13, lifted by a surge in oil prices as investors anticipated a slow recovery in US crude production following cold weather in the state of Texas. Oil Search rose 8.6% after posting a surprise underlying gain.

Newcrest Mining and AngloGold Ashanti led gains among gold miners, which rose 5.6%, as concerns over rising inflation and a weak US dollar pushed the metal higher.

Stronger gold bullion and copper prices supported a more than 1% gain in the heavyweight miner, which hit the highest level since Jan. 8. Copper prices broke the $ 9,000 mark for the first time since 2011 amid indications of limited supplies.

New Zealand’s benchmark S & P / NZX 50 index fell 0.6% to 12,356.68 and is on track for a fourth straight session of decline. (Reporting by Arpit Nayak in Bengaluru; Editing by Subhranshu Sahu)

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THE EMERGING MARKET-Brazil stocks hit by fears of government interference, FX falls | Instant News


    * Petrobras, Bovespa set for worst day since March
    * Coronavirus aid extension in Brazil to be discussed this
week
    * Mexican peso down for sixth straight session 
    * Chile's peso sole gainer 

 (Adds details, updates prices)
    By Susan Mathew and Ambar Warrick
    Feb 22 (Reuters) - Brazil's benchmark Bovespa index tanked
on Monday as oil major Petrobras plummeted 21% following the
ouster of its investor-backed chief executive, while Latin
American stocks and currencies fell as higher inflation
expectations hurt sentiment. 
    After weeks of sparring between CEO Roberto Castello Branco
and Brazilian President Jair Bolsonaro on fuel prices, former
Defense Minister and retired army general Joaquim Silva e Luna,
who has no oil and gas experience, was appointed to take over.

    Branco's ouster could force a broader shakeup at Petrobras,
which has steered toward more market-friendly and less
politically driven policies in recent years.
    Petrobras shares were on course to
post their sharpest one-day decline since March last year, as
was the Bovespa, which sank nearly 4%.  
    "The reversal of these types of practices by Bolsonaro early
in his administration was a key credit positive for Brazil's
quasi-sovereigns," said Citigroup strategists. 
    "A reversal of this policy is a clear credit negative."
    Banco do Brasil, caught up in a spat with
Bolsonaro over branch closings, slumped 11%, while power company
Eletrobras skidded nearly 3% amid signs of the
president's interference in the power sector.

    Brazil's real fell as much as 2.8%, hitting
lows not seen since November last year, while the cost to insure
exposure to Brazil's sovereign debt jumped 22 basis points from
Friday's close.
    "Local assets will underperform across the board in the very
short-term," Citigroup warned, adding that a break in the key
5.50 level of dollar-real pair could see further continuation of
weakness in the real.  
   Investors also have their eyes on a discussion regarding an
extension of Brazil's emergency aid bill this week, with eyes on
cost cuts elsewhere to keep spending within the limit.

    Worries about stretched fiscal spending have caused the real
to lag its emerging market peers widely in 2020. This year, the
currency is down about 6% so far.  
    Other currencies in Latin America also
dropped, pressured by rising U.S. Treasury yields and inflation
expectations.
    Higher U.S. yields pressure risk-driven assets by offering
relatively stronger and safer returns. 
    In its sixth straight day in the red, Mexico's peso
hit its lowest since early November as a deep freeze in Texas
continued to raise concerns about a hit to factory activity in
the country.
    A corresponding surge in oil prices failed to support the
peso, while Colombia's peso also dropped.
    Surging copper prices saw Chile's peso as the only
gainer for the day. 
        
    Key Latin American stock indexes and currencies:
    
                              Latest      Daily % change
 MSCI Emerging Markets         1402.48               -1.93
                                        
 MSCI LatAm                    2311.50                -3.8
                                        
 Brazil Bovespa              114019.83               -3.72
                                        
 Mexico IPC                   45035.62                 0.3
                                        
 Chile IPSA                    4569.36               -1.18
                                        
 Argentina MerVal             49446.07              -3.033
                                        
 Colombia COLCAP               1348.63               -0.29 Currencies             Latest      Daily % change
 Brazil real                    5.4412               -1.08
                                        
 Mexico peso                   20.6505               -1.09
                                        
 Chile peso                      706.1                0.27
                                        
 Colombia peso                    3591               -0.60
 Peru sol                       3.6518                0.00
                                        
 Argentina peso                89.4300               -0.30
 (interbank)                            
                                        
 
    
 (Reporting by Susan Mathew in Bengaluru; Editing by Steve
Orlofsky and Dan Grebler)
  

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The outlook for Brazil’s 2021 inflation rises to new highs, above the central bank’s target: survey | Instant News


FILE PHOTOS: People walking on a popular shopping street before Christmas, amid the coronavirus disease (COVID-19) outbreak, in Rio de Janeiro, Brazil, December 23, 2020. REUTERS / Pilar Olivares / File Photo

BRASILIA (Reuters) – Brazil’s inflation outlook this year rose for a seventh week and to new highs, a central bank survey of economists showed on Monday, while official interest rates are now expected to double by the end of the year.

The median forecast for IPCA consumer price inflation at the end of this year rose to 3.8% from 3.6%, according to the latest ‘FOCUS’ weekly survey of more than 100 economists.

That’s above the central bank’s target of 3.75%, with a margin of error of 1.5 percentage points on either side, and the highest forecast for 2021 in the series.

The forecast for average inflation over the next 12 months is up to 3.8% from 3.7%. The central bank’s final 2022 target is 3.50%.

A persistently weak exchange rate, strong global commodity prices, and heightened concerns over the government’s fiscal position have all pushed inflation expectations higher, and hence interest rate expectations.

The forecast for the benchmark Selic’s benchmark interest rate at the end of this year rises to 4.00% from 3.75%, the survey showed, showing that markets now expect Selic rates to double this year from the current record low of 2.00%.

Last month, the outlook for the end of 2021 was 3.25%. But the central bank dropped its forward guidance at its January 19-20 policy meeting, citing rising inflation expectations near its target over the next few years.

Credit Suisse and Barclays economists expect the central bank to raise interest rates as early as next month.

The FOCUS survey also showed that economists expect realization later this year at 5.05 per dollar, up from 5.01 per dollar last week. It is currently trading around 5.40 per dollar.

Reporting by Jamie McGeever; Edited by Catherine Evans

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